NatWest has announced yet another round of mortgage rate increases, effective from the 31st January 2025 (This Friday). The changes, which impact a variety of mortgage products across its new business range, see rate hikes of between 0.02% and 0.11% on selected two- and five-year fixed-rate deals. While these percentage increases may seem minor at first glance, they could significantly impact borrowers already struggling with the UK’s high cost of homeownership. In this article I will run through the NatWest mortgage rates increasing this week, and give my thoughts on what impact this could have.
What Are the Key Changes to NatWest Mortgage Rates?
For those looking to purchase a property, NatWest’s latest rate rises will affect:
- Standard two-year fixed-rate mortgages at 80% and 85% loan-to-value (LTV), increasing by 0.06% to 0.08%.
- Five-year fixed-rate deals across various LTVs, increasing by up to 0.11%.
- High-value products, which will see smaller but still notable increases of 0.04% to 0.06%.
- First-time buyer mortgages, rising by up to 0.10%, making it even tougher for new entrants to get on the property ladder.
- Green mortgage products, increasing by up to 0.06%.
With borrowing costs on the rise yet again, many homeowners and prospective buyers are left wondering whether the dream of affordable homeownership is slipping further away.
Why Are Mortgage Rates Increasing?
The rise in NatWest’s mortgage rates is reflective of wider market trends. Over the past year, mortgage lenders across the UK have been adjusting rates in response to ongoing uncertainty around inflation, interest rates, and economic stability.
While the Bank of England’s base rate remains a key driver of mortgage costs, lenders also adjust rates based on factors like swap rates (which influence the cost of borrowing for banks) and risk appetite. With economic forecasts remaining unpredictable, banks are hedging their bets by keeping mortgage rates elevated.
The reality is that mortgage rates are unlikely to see a significant drop in the NEAR future. While some analysts predict that the Bank of England could start easing rates later in 2025, this is by no means guaranteed. If inflation remains stubbornly high, interest rates could stay elevated for longer, forcing lenders to keep mortgage rates at a premium. It is as simple and yet as complicated as that!
What Does This Mean for Borrowers in 2025?
For first-time buyers, the situation remains challenging. House prices may have stabilised, but the combination of high deposit requirements, tough affordability checks, and rising mortgage rates makes it increasingly difficult to secure an affordable loan. For existing homeowners looking to remortgage, the rate hikes highlight the importance of securing a new deal sooner rather than later. Those coming off lower fixed-rate deals from previous years could face significantly higher repayments if they don’t lock in a competitive rate now. For buy-to-let investors, rising mortgage rates squeeze profit margins, making it even harder to achieve favourable returns in an already tough rental market.
How Oportfolio Mortgages Can Help You Get the Best Deal
With lenders regularly adjusting rates, it’s more important than ever to work with expert mortgage advisors who can help you find the most competitive deals available. Our team specialises in helping first-time buyers, home movers, and those looking to remortgage secure the most competitive rates on the market. We have access to a wide range of lenders, including exclusive mortgage products that may not be available directly to consumers. Get in touch today to speak with one of our experienced mortgage advisors.
